It's Not Me, It's You: Scare off Potential Bad Eggs and Allay Buyer Concerns
Programs like ReliaBid and SquareTrade's seals can be very effective in nipping the problem of bad feedback in the bud. As you may have read on their web site, ReliaBid's member online auction sellers have experienced an average reduction in non-paying bidders and unpaid items of over 99%. And that's where bad feedback can originate, with these non-paying bidders and other "bad eggs," if the buyer leaves you retaliatory bad feedback after you leave them a negative. So use services like ReliaBid to put an end to "bad eggs" before they can hurt you. Prevention is the key.
Similarly, the SquareTrade seal inspires buyer trust and lets them know you're willing to work with them should something go wrong.
Turn the Other Cheek
If something does go wrong, hopefully the buyer emails you before he or she leaves a neg. Here's where you get your chance to make up for the problem and prevent bad feedback. And here's where I think sellers most squander that chance. They get caught up in an argument with the buyer; they disagree with the buyer about how flawed something is, how late it was, etc. Here's where it's hard to turn the other cheek, even if you think you're right. But doing so can be so worth it.
Offer some money off. If that doesn't work, consider offering a complete refund if you can afford it. Again, I'd rather offer a complete refund for an item (within reason) than have a negative sitting on my record for years. It surprises me that a seller would rather dicker over 20 bucks and get a potential negative than just suck it up and cough up a refund, and chalk it up to the cost of doing business. There is still that old saw, "The customer is always right." (I especially like that saw when I am a customer).
Make It Mutual
It was a great day when eBay instituted Mutual Feedback Withdrawal (MFW), I think. This process sometimes comes into play when one party jumps the gun and leaves a feedback before they contact the other and give him or her a chance to make it right. Or maybe both tempers flared, and later cooled. There are a few caveats, though: per eBay: "When feedback is withdrawn, the positive, negative, or neutral rating associated with that feedback comment will no longer show or count in your feedback score. However, the feedback comment itself will remain. It's still always a good idea to try and resolve trading issues before leaving a negative feedback, whenever possible." You also must wait to initiate the request for MFW "within 30 days of either person leaving feedback or within 90 days of the transaction end date, whichever is later." The url for MFW is here.
Erase Bad Feedback with SquareTrade
Another way to potentially nuke bad feedback is through the SquareTrade mediation service. I talk about this in my book, eBay Top 100 Simplified Tips & Tricks (insert shameless plug here). Go to their site at squaretrade.com for details. The current fees are $29.95 standard pricing or $19.95 for their "Expedited Resolution Service Subscribers." I've used SquareTrade myself and was totally happy with it.
However, there is anecdotal evidence that buyers might leverage negative feedback they've already left during the mediation process. Buyers know that the seller wants the negative removed, so they may essentially blackmail the seller out of money or goods to have the mark erased. ReliaBid is a way for sellers to gain back some power by having a similar grip on the buyer's credit score.